In the early months of a new year always comes the desire for a fresh start. Maybe it’s the busyness of the holidays or the exhaustion of trying to wrap up things before the year ends, but for whatever reason, I always look forward to starting the year off with a new attitude, new goals and a newly created To Do list. One of the most important agenda items for any small business owner should be to take a look at their company’s finances.
If you’re thinking about getting financing in 2013 (or at any point in the future), it’s crucial to keep an eye on how closely you’re sticking to your business budget. Did you spend too much on unnecessary expenses last year, or cut back too far to the detriment of some initiatives? Should you have allocated funds to a different project, or did you underestimate the costs of an essential piece of equipment? Now is the perfect time to get a handle on your cash flow, so you can lessen any fiscal surprises in 2013. Here are some more items to think about, especially if you’re planning on applying for a loan.
1. Review New Business and Old Business: Do you have any contracts coming to an end? Which of those can you count on renewing, and which ones are less certain? What new business do you have in the pipeline? What can you do to close the deal on potential new business where the client is wavering?
2. Decide Where You Can Save: If you need to cut back on spending, go over every detail to see what you can live without, such as unused memberships and subscriptions or even office supplies that got put in a drawer and never used. You may have signed up for some automatic payments that seemed small at the time but can add up. Also, take a look at your insurance policies and equipment leases. Go over your contracts with your representatives and see where you can save. That also goes for utilities such as electricity, Internet and telecommunications.
3. Spend in the Right Places: You might need to reallocate some funds if spending now could make you more money in the long run. Have you put off buying your sales staff iPads, when the purchase could be doubling their efforts? Have you put the right amount into your marketing efforts or have you slashed marketing to the bone? What about hiring? Do you need a social media expert or a Web designer? What about your loyal employees who stick with you through good times and bad? Have they waited long enough for a pay raise? If you’re applying for financing, the bank lender or investor will want to see who’s on your team and what kind of staff turnover you have.
It’s a good idea to go over your finances with an expert who can point out red flags that you might not be able to see. Make an appointment with your local SCORE office to get personalized attention and advice and start 2013 off on the right foot.